In order to set up a limited company in Thailand, the following procedures should be followed :
Corporate name reservation. The name to be deserved must not be the same or close to that of other companies. Certain names are not followed and therefore the name reservation guidelines of the Commercial Registration Department on the Ministry of Commerce should be observed . The approved corporate name is valid for 30 days. No extension is allowed.
File a Memorandum of Association
A Memorandum of Association to be filed with the Commercial Registration Department must include the name of the Company that has been successfully reserved , the province where the company will be lacated, its business objectives , the capital to be registered ,and the names of the seven promoters. The capital information must include the number of shares and the par value. At the information step, the authorized capital, although partly Paid , must all be issued.
Although there are no minimum capital requirements, the size of the capital should be respectable enough and adequate for the intend business operation.
The Memorandum registration fee is 50 baht per 100,000 baht of registered capital. The minimum fee is 500 baht , the maximum 25,000 baht.
Convene a Statutory Meeting
Once the share structure has been defined , a statutory meeting is called. A minimum of 25 percent of the par value of each subscribed share must be paid .
Within three months of the date of the Statutory Meeting , The directors must submit applications to establish the company, Company registration fees are 500 baht per 100,000 baht or registered capital . The minimum fee is 5,000 baht; the maximum fee is 250,000 baht
Businesses liable for income tax must obtain a tax I.D. card and number for the company from Revenue Department within 60 days of incorporation or the start of operations. Business operators earning more than 600,000 baht per annum must register for VAT within 30 days of the date they reach 600,000 baht in sales.
Firms must keep books and follow accounting procedures specified in the Civil and Commercial Code, The Revenue Code and the Accounts Act. Documents may be prepared in any language, provided that a Thai Translation is attached. Imposition of Taxes
Companies are required to withhold income tax from the salary of all regular employees. A value-added tax of 7 percent is levied on the value added at each stage of the production process, and is applicable to most firms. The VAT must be paid on a monthly basis.
A specific business tax is levied on firms engaged in several categories of business not subject to VAT, based on gross receipts at a variable rate ranging from 0.1 -3.0 percent. Corporate income tax is 30 percent of net profits and is due twice each fiscal year. A mid-year profit forecast entails advance payment of corporate taxes.
A balance sheet must be prepared annually. The performance record is to be certified by the company auditor, approved by shareholders , and field with the Commercial Registration Department, Ministry of Commerce , within five months of the end of the fiscal year, and with the Revenue Department, Ministry of Finance, within 150 days of the end of the fiscal year.
Types of business organization
Thailand recognizes three types of business organizations :
This is a firm owned by a single individual which is not incorporated. All of the proprietor’s assets , both business and personal,are subject to attachment or other legal actions which may be brought with respect to the business.
Thai and Western concepts of partnership are broadly similar . Thailand provides for three general types of partnerships :
Unregistered ordinary partnerships in which all partners are jointly and wholly liable for all obligations of the partnership
Registered ordinary partnership. If registered, the partnership becomes a legal entity, separate and distinct from the individual partners
Limited partnerships. Individual partner liability is registered to the amount of capital contributed to the partnership, Limited partnerships must be registered.
There are two types of limited companies,i.e. private or closely held companies and public companies.The first is governed by the Civil and Commercial Code, The Second by the Public Company Act.
Limited Companies in Thailand have basis characteristics similar to those of Western corporations. A limited company is formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents.
Shareholders enjoy limited liability, i.e. limited to the remaining unpaid amount, if any , of the par values of their shares. A minimum of seven shareholders in the case of a private limited company, is required at all times.
Public Limited Companies registered in Thailand may, subject to compliance with the prospectus,approval ,and other requirements, offer shares , debentures and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand(SET).
Other Forms of Corporate Presence
Branches or Foreign companies. There is no special requirement for foreign companies t register their branches in order to do the business in Thailand.However, most business activities fall within the scope of one or more laws or regulations which require special registration , either before or after the commencement of activities. Foreign business establishment must, therefore, follow generally acceptable procedures.
A representative office of foreign corporations may also be established to engage in limited “non-trading” activities such as souring of goods or services in Thailand for its head office or inspecting and controlling quality of goods which its head office purchases in Thailand.
A regional office of a multinational corporation may also be established to coordinate and direct the operation of the branches and affiliates of the head office in the region on behalf of the head office. It must not generate any income or engage in any business negotiation. Regional offices are, however , eligible to apply for promotion from the Board of Investment and are eligible to generate income if they are approved.